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Importance of Commerce

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Commerce belongs to the branch of business. It is related to the process of trade and any kind of activity happening between two people and parties with the exchange of money.

The main role of commerce in business is distribution. Whatever the products are produced. If there is no availability of resources and raw material on time then there is no product ready for sale.

Commerce help in the distribution of all required resources by efficiently calculate and analyze the situation so that the consumption process will be completed on time.

According to James Stephenson: Commerce is the well-planned process for the exchange of goods and services between two parties in the industrial world.

In a wide way: Commerce is that part of a business that includes all directly and indirectly activities related to buying and selling of any product with the exchange of money.

Importance of Commerce

There is other importance of commerce which are mention below:

  • Satisfy human demand
  • Raise standards of living
  • Commerce generates link between producer and consumer
  • Increase employment opportunity
  • Increase the economy
  • Help in the expansion of trade and aids
  • Commerce help in growth in industrial development
  • Encourage international trade
  • Help underdeveloping country
  • Commerce help in emergencies.

Satisfy Human Demand

Human demands are increasing day by day. Scholars divide human demands into two-classes that are named as basic demands and secondary demands. Food, health, education, and a peaceful environment are included in basic needs while in secondary demand luxuries of life like electronics, vehicles, and easy means of communication are included.

Commerce help in the distribution of all required resources and raw material need for the consumption of product and goods on time. It also plays a vital role in trading which helps in the availability of any product and technology to the whole world. By this commerce somehow fulfills human never-ending desire and also promote social welfare.

Raise Standard of Living

The standard of living relates to the lifestyle of members of society. If the majority numbers of people can afford to consume more and advanced products than their standard of living is high. To raise the standard of living, commerce plays a significant role by making every product available for every person around the globe.

To consume expensive and advanced products, consumers should be able to secure it first. Commerce basically helps to manage the right thing at the right place and thus able to improve the standards of living of the human.

Commerce generate link between consumer and producer

Products are produced for means of consumption. Consumption of products is the ultimate goal of companies and manufacturers. Commerce creates a link between seller and buyer through wholesalers and retailers. So that the product can reach to their consumers on time.

Commerce helps to provide complete product information and specification to consumers through advertisement and salesmen. By conducting marketing research manufacture are well aware of the likes and dislikes of consumers.

This help to locate those specifications in a product to meet consumers need. By this commerce create a direct link between the manufacturer of product and consumer.

Increase employment opportunity

The growth of the commerce industry and trade increases the requirement of employees in their related corporate sectors like banks, transport, warehouse, and marketing.

The increase in their financial, marketing, and production process need more worker to handle it. It boosts the employment rate of the country by providing job opportunities to millions of people in it.

Increase the Economy

GDP of any country is directly related to production. Production and manufacturing contribute 80 percent in the net income of the country. Commerce helps in the growth of production and consumption of the product.

It also helps in export and imports of goods from other countries. If any country needs raw material for the production of any good then they can import it through effective commerce. Thus we can say that commerce has a major role in the growth of the economy.

Help in the Expansion of trade and Aid

With the growth in the trade and commerce sector. There is a need for expansion and modernization seems in aids of trade. Aids of trade are related to sectors like banking, transport, finance, and marketing. With the smooth and well organize commerce, these means of aid to trade can be modernized and expanded to meet with advanced world requirements.

Commerce help in growth in industrial development

Commerce helps in the smooth process of production and industrial development. Without efficient commerce, Keeping records and manage the data is very difficult. Commerce help to meet the consumer’s need by provide the desired product on time.

While on the other hand, it provides raw material and goods to the manufacturer so that the production process will not be delayed. Hence we can say that commerce help in an increase of the growth in industrial development and production in the country.

Encourage International Trade

Through commerce, countries can exchange their surplus goods and products with other countries. With easy transportation and communication, countries can buy and sell their products internationally and earn foreign money. Foreign trade has some laws and international standards that save the countries from any loss and fraud.

Help under developing country

Underdeveloping and developing countries can import skilled labor and technical information from developed countries while developed countries can import raw material from under developing countries. These exchanges help to make the financial condition of the undeveloped countries stable.

Commerce help in Emergencies

During emergencies like natural disasters, earthquakes, floods, and wars. Commerce help to locate the essential requirement like food, medicine, and other reliefs to those areas for help.

Conclusion

Commerce is related to business. Effective commerce increases employment opportunities and demands of workers in its related sectors like banking, marketing, warehouses, and transport. Commerce helps to manage the record and data for efficient results.

It increases the industrial development and production level of the country. Commerce also plays a vital role in import and export and directly impact on countries’ GDP. So if countries pay interest in their commerce sector then it will give them benefits in different ways.

Types of Channel of Distribution in Businesses

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It is concerned with the system of marketing institution through which goods or series are transferred from the producers to the consumer. A larger number of products do not reach the consumers directly, there is an indirect method of dealing between producer and consumer.

A channel of distribution for a product is the route taken by the title to the goods as they move to form the producer to the ultimate consumer or industrial user

A channel always comprises both the producer and the final consumer, as well as all agents, merchants and middlemen involved in the title transfer.

The channel does not include firms such as high ways banks, insurance companies and other middlemen institutions which perform marketing and advertising functions but play no prominent part in negotiating purchases and sales.

A channel of distribution is also called a Trade channel

Traditional Approach

Channel of Distribution

This method of selling is the most important of all distribution channels. Small producers, wholesalers and retailers find this channel the only economically feasible choice. This is also known as the “Traditional” channel for consumer goods.

Channel of Distribution

Sales by producers to retailers have become even more common as the scale of production has increased. This method of selling is employed largely by making a lawful contract for the automobile industry and by other producers who sell large quantities on contract to chain stores, mail-order houses and other large retailers.

Usually, Contracts are made directly between the purchaser and the producer without the intervention of a salesman who calls regularly.

Channel of Distribution

Some producers sell direct to end users, with no middlemen involved. This type of operation is found more frequently in the marketing of industrial and some agricultural goods and services than in marketing to domestic consumers. Door to door selling and mail order, however, are examples of direct consumer marketing.

Channel of Distribution

If production is on a very large scale, manufactures may be able to operate their own retail shops. Producers own shops are familiar in a number of retail fields, including shoes, food, clothing, varnish, furniture, paint petroleum and diary products.

Channel of Distribution

This channel involves intent on the part of the producer to bypass the wholesaler. It is sometimes employed by producers who manufacture large quantities of product. This method of selling is used by some manufacturers in several industries i.e. drugs and groceries market.

Channel of Distribution

Small producers prefer to use a manufacture’s agent, selling agent or broker who in turn go to wholesalers who sell to small stores.

Channel of Distribution

Many producers often use agent and middle man to reach the large scale retailers. A manufacturer of a glass cleaner selected a food broker to reach the grocery store market, including the large chains.

Channel of Distribution